This article first appeared in Forum, The Edge Malaysia Weekly on September 27, 2021 - October 3, 2021
In Malaysia, as elsewhere in Southeast Asia, consumers have altered their behaviour significantly in response to lockdowns and other pandemic uncertainties, with a shift towards online modes. This represents a challenge for companies — as well as a huge opportunity to tap into the power of modern digital marketing.
As consumers have adapted to remote work and study, consumption patterns have changed. McKinsey research, globally and in Asean countries, shows that not only have consumers shifted to digital channels, but that these habits are set to persist even after the pandemic. Loyalty patterns have also changed, making it even more critical for companies to retain existing customers and acquire new ones.
Customers are spending more time and resources on websites, mobile apps and customer-service channels — and in response, there has been a shift in advertising spend as companies diversify across media. There is also a noticeable increase in customer conversion rates, with social and digital video channels driving the highest return on investments (ROIs).
Digital marketing is now a growth engine for companies across sectors, potentially driving large revenue increases — 5% to 8% over 12 to 18 months, as our recent research on areas of growth for digital marketing suggests. Some financial institutions have seen an up to a fivefold increase in digital sales, while select telecom players have reduced churn by 15% to 40%. At a time when growth opportunities are limited, these gains are crucial.
Malaysia is more than ready for a digital marketing acceleration: in a March 2020 survey, more than half of the respondents said they were spending more time online. But despite all this new engagement, Malaysian marketers have often not kept pace — in many cases, they lag behind Asean peers’ digital strategies.
For example, McKinsey’s analysis suggests that Malaysian banks spend one-third of the Asian average on digital marketing per customer and generate only one-seventh of the digital acquisitions. Malaysian businesses urgently need to upgrade their digital marketing strategies so as not to be left behind by their increasingly online customers.
To derive the full benefit from modern digital marketing, our research suggests that companies need to make bold and decisive moves in five areas:
1. Double down on performance marketing
Performance marketing focuses on continually optimising performance metrics. It plays a vital role in enhancing customer experience through interventions such as digitising interactions and rapid customer-service response.
Focusing on the most valuable customer metrics is key. One telco in Indonesia, for example, prioritised daily new customer referrals. Within one month, referrals comprised more than 20% of all new customers, helping the business reach its 12-month customer goal in just seven months.
2. Move to a modern martech stack
Many organisations fall into the trap of investing in martech solutions before carefully thinking through how to use them, resulting in disappointingly low ROI.
A modern martech stack and data setup has three essential capabilities. First, it must automate and personalise campaigns. Second, it must segment customers, based on their off-and-online data. And third, it must collect and register customer behaviour, and provide a platform for analytics.
Deploying a martech stack is less intimidating than it may seem; components may already exist and can be repurposed, or sourced through an on-demand, scalable cloud model. One Asean telco, for example, used existing components to launch its martech stack in less than four weeks. The key is to take an outcome-focused approach to implement a workable initial stack before adding the “bells and whistles”.
3. Enable an agile operating model for marketing and technology teams
For a digital-marketing strategy to succeed, marketing and technology teams need to work in lockstep. A great way to achieve this is to utilise talent, forming agile squads to target key performance levers. These should encompass expertise in growth marketing, search-engine optimisation, user-experience design, HTML development, attribution analytics, broad campaign management and copy writing.
In one example of this model, a Hong Kong-based retail bank, struggling with flattened growth in credit card sales, mobilised an agile squad to develop a digital sales acceleration playbook. This effort resulted in a 23% increase in card applications and a 22% reduction in cost per acquisition.
4. Balance spend allocation between channels
Organisations often struggle to decide how much to spend online versus offline. Geospatial analysis can inform these decisions, combining granular geographical data with other forms of demographic, connectivity, behavioural and income data to create micromarket archetypes.
Companies also grapple with how much to spend in each subchannel. Organisations often display a “last click wins” bias in digital-ROI assessment, leading to over-emphasis on some channels. Multitouch attribution, which looks at the full customer journey, is a useful — and underutilised — approach that aims to counteract this bias.
5. Ensure responsible first-party data management
Privacy issues lie at the heart of the trust between the customer and the brand. Organisations must demonstrate that they take data privacy seriously.
A key question is how data can be scaled while maintaining customer confidence and privacy. As regulations evolve, organisations could be more proactive. Transparency regarding how data is used is critical, as is staff training, implementing measures to prevent data theft and continually increasing the opt-in base, with accountability as a guiding principle.
Malaysian businesses could take bold and decisive actions to navigate uncertainties from the Covid-19 crisis, especially as consumer habits continually evolve in response. With these five imperatives in mind, leaders can up their digital marketing game and strategise their recovery plans.
Nimal Manuel is a senior partner in McKinsey’s Kuala Lumpur office, where Gareth Davies is a consultant
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.